DEFINITION of 'Appraisal Method Of Depreciation'
A form of depreciation calculation that is based upon appraisal value. The appraisal method of depreciation is calculated by appraising the value of the asset being depreciated both at the beginning and end of the depreciation period. The difference between the appraised values constitutes the amount of depreciation that can be taken.
BREAKING DOWN 'Appraisal Method Of Depreciation'
The appraisal method of depreciation assumes that the value of the asset being depreciated is decreasing over the term. If this is not the case, then no depreciation will be reported. Furthermore, this method of depreciation calculation is generally not recognized by GAAP principles.